What Brought Down the Rupp Arena Renovation Project

For the future of Kentucky basketball, today was a disappointing day. After a few months of the project teetering on the edge, Lexington Mayor Jim Gray announced that he was "postponing" the Rupp Arena Renovation due to a lack of support/interest from the University of Kentucky. If you believe that Kentucky basketball will in the very near future need to upgrade its basketball home arena (and I do), the end of the Rupp Arena project comes as negative news. Yes, the mayor says that the proposal is just being postponed, but for all intents and purposes at this point it is over. The state Legislature isn't behind it, the University isn't behind it, the public support has lagged and the enthusiasm, which at one time was at a high level, has completely died. An idea that just a few short months ago seemed like almost a foregone conclusion has deteriorated quickly into an unfortunate death. The reasons for this collapse however are numerous. The Mayor blames a lack of support from the University, however that is misplaced to me and overlooks the many issues that plagued this proposal in recent months. In reality, the Rupp Arena project collapsed due to a number of poor decisions by its advocates, all of which could have been avoided with a better handling of the situation. While I like the Mayor a great deal and believe that his interest and goal of creating a renovated Rupp Arena and downtown business district was sincere and noble, the handling of the process from the beginning begat the final result. Rupp Arena died not because of the merits or lack thereof of the proposal, but because of the decisions made by those in charge of executing the plan. Issue One: The Mayor's Plan was Too Broad From moment one, my biggest complaint with the entire project was its scope. The Mayor believes sincerely that the downtown of Lexington would be best served by a broad renovation of not only Rupp Arena, but also the Convention Center, an arts district and an overall downtown economic plan. However from the get go, the city has lacked enough advocates of its "non-Rupp" piece of the proposal to get anything close to a consensus about its funding. So the Mayor made the decision to make the renovation of Rupp Arena, a change that would in theory be broadly supported, as the steamboat that dragged along the less sexy parts of the project. If enough people were for Rupp, the thinking went, the other components would happen as well and the entire city would be benefitted. Plus, the addition of the Convention Center renovation and the "parks and streams" components (a phrase I often used on the radio show) of the project would help satisfy that vocal minority of Lexington residents who think too much is done for UK sports at the expense of the arts and economic development. Kill all birds with one stone, get the money for all the projects and everyone wins, right? Sounds great in theory, but in this case the devil was clearly in the details. In an economic climate that is nowhere close to ideal and with rising costs that continued to escalate, the grand project had no real advocates beyond the city itself and the Governor. There was no real push from the local business community (especially after a controversial hotel tax was added to the funding mechanism), civic groups viewed it with skepticism and thus the loudest advocates remained fans on the basketball side. However many people, myself included, wondered why Rupp Arena in general (and UK basketball specifically) should have to carry the weight for other parts of the project that seemed to have little support from anyone and were a HUGE upgrade to the cost. I still firmly believe that if the Mayor had simply focused on a Rupp renovation ONLY, it would have passed. The cost would have been substantially less and the state-of-the-art facility created could have set the table for future changes to other parts of downtown. The Mayor has responded that because of the design of the building, it would have been impossible to only fix Rupp without also totally remodeling the Convention Center as well. But I am skeptical. While that may have been true of the current plan, why not choose a different design? The city looked worldwide for the best sports arena designers for its plan...I am sure it could have found one somewhere to have a creative enough proposal to fix Rupp (or even build a new Rupp Arena) in a way that would not have also required redoing an entire convention center. The day the decision was made to make the proposal broad, the city made complicated that which should have been easily completed. Issue Two: The City's Relationship with UK on Project From moment one, the interaction between the city and the University was plagued by problems. UK knew that the entire economic project was going to be built on the backs of Rupp Arena, which essentially also meant on the back of UK basketball. And it recognized that it was being asked to essentially help rebuild downtown Lexington, primarily through its basketball season ticket holders. UK was adamant in discussions that it didn't want to require high price upgrades for regular season ticket holders and that whatever renovation occurred be state of the art and built with basketball in mind. The tension thus between what UK required and how the city envisioned the project existed from day one. The city wanted basketball to be the basis for a massive facility upgrade, but UK understandably wanted to not to be shortchanged in that exchange. Plus, UK President Eli Capilouto expressed his feeling on the overall University at this time, specifically that is has other priorities besides basketball at the top of its agenda. The President inherited a campus with a great number of infrastructure needs and whatever political capitol the school had with Kentucky legislators was not going to be used to help build a basketball arena/convention center that the school doesn't even own. Sources both with the city and UK have told me that from day one, Capiluoto was clear that UK had its own funding requests to make in Frankfort and while it would support a Rupp renovation, it would not do so at the expense of these requests. If both could be satisfied, UK would be happy, but the focus would be on over $100 million in funding requests for the University (including a new law school), not the city's request for a renovated Rupp. This caused tension between the parties from day one as the city leaders knew that if UK in general, or John Calipari in particular, were to come out loudly in support of the project, then it would almost certainly pass. But the University was concerned about its own requests and refused to do so and thus, the tension built. More than any other issue, this tension between the University and the city doomed the project. Legislators who were against the funding did not have to worry about suffering a strong political backlash, because they knew that none of the popular UK leaders (aka Calipari) were actively, publicly supporting the deal. The city thus was without its biggest advocate and members around the mayor became resentful of the University's continued silence. Even though UK's position never changed, as the deal began to slip away, the city blamed UK for its lack support, further deteriorating the relationship. From Day One, UK was clear that it knew the city was trying to build an expansive project on the back of UK basketball and it would only agree if both its basketball demands and more importantly, the University infrastructure needs as a whole, were supported. When that didn't happen, cracks between the two parties only deepened. Issue Three: The Funding Proposal Had Many Holes The city of Lexington could never find a concrete funding mechanism to support the extremely high cost of its overall project. Every time a new idea was presented, some entity was against it. A hotel tax was considered, only to meet resistance from the business community. A large portion was to come from the state, only to see problems in Frankfort (more on that later). In fact, the only entity that was supposed to contribute money that was uncontroversial was UK, which pledged a major increase in its lease payment as part of the new arena (in return it would have taken over control of some advertising in the arena and seating costs, which would have still generated a higher profit). No matter how the Arena was to be funded, the high cost and shaky ground of the sources were a perpetual problem. And nothing showcased this issue more than the absurd "Team Rupp" fundraising portion of the project. There is no bigger UK fan than me and as we show daily on this site, there is no one who believes greater in the possibility of the Big Blue Nation that I do. But the notion that 140,000 UK fans would each donate $300 in order to build the new Rupp renovation (and convention center) struck me as ridiculous. In exchange for this $300, UK fans would get...well they would get nothing except a sheet of paper saying they "owned" part of the Arena (with no real worth) and were an "official" BBN member. Leave aside my aversion to the notion that if you don't pay money you aren't an "official" member of BBN, but I couldn't fathom why anyone would do this. How could hundreds of thousands of fans who NEVER GET TO GO INTO THE ARENA FOR GAMES, be expected to pay for it directly? And what would be their individual incentive to participate? It struck me as a pie in the sky fantasy and a bizarre way to raise $35 million dollars (in fact, I am told the total envisioned originally was actually higher). Some lawmakers said this provision was a major reason the funding request fell in Frankfort. Whether that is true or not, it remained a significant hole in the overall plan and was symbolic of funding problems that plagued the project as a whole. Issue Four: Rupp Becomes a Frankfort Political Pawn Even with all of the problems outlined above, it is likely the case that the Rupp Arena Renovation project funding normally would have passed the Kentucky legislature anyway. Virtually every major funding provision has problems and significant amounts of money have been given to a myriad of projects with a great deal worse financing situations (like the Yum Center for instance, which clearly cast a shadow over Rupp as well) than the one in Lexington. Throw in the city of Lexington's strong credit rating and the general ability of Kentucky basketball to pay for itself multiple times over and the issues with the Rupp plan could have still been saved. But then Rupp Arena became an election year issue that politicans were all too eager to exploit. While the Kentucky Governor and House of Representatives were both for the project, it got hung up in the Senate due to Senate Majority Leader Robert Stivers. In an election year, Stivers believed it was important for the Senate Republicans to be able to say that they had never voted for any bill that would raise any tax, and the first (although not the second) incarnation of the Rupp bill included such a tax. Throw in the fact that Stivers knew how valuable the Rupp prize was to the House Democrats and Governor, and the issue became a hot potato bounced back and forth in negotiations throughout the Legislative session. A source in the Kentucky Senate told me today, "Stivers wasn't all that strongly against it, but the advocates weren't all that strongly for it. It just became a bargaining chip and with no strong public support, it was one that could be discarded by Stivers if need be." And discard it he did. The issue was being debated during Kentucky's magical March run this year (meaning fans didn't pay attention), the Mayor came to Frankfort and struggled in some questioning before the Senate (a performance that did hurt the cause) and then a poll came out said Kentuckians weren't for the proposal. The latter event was a bit specious due to the misleading wording of the poll, but it didn't really matter. It gave those against the proposal all the support they needed to continue to oppose it. Everyone I have spoken with says that people in Frankfort didn't feel strongly one way or the other about the Rupp Arena proposal. But that was the problem...because no one really cared, old-fashioned bargaining Kentucky politics made the decision. Stivers saw Rupp Arena as a chance to one-up his political opponents and he used it. With UK taking no public stance, and Calipari silent on the issue, there became no real political backlash to letting it die with other funding requests. And thus the Senate denied the request, and won that week's political war. Issue Five: Brent Rice Makes the Worst Decision Imaginable The most important figure in the entire Rupp Arena process was an individual (picture along with Gray and Stivers above) that many people have never heard of. Brent Rice is head of the Lexington Center Corporation and was the main advocate of the project in conversations with the University, state and other entities. He was the private face of the Rupp Arena Renovation project and was its most vocal advocate. The problem is that he also misplayed his hand and believed the city to have much more leverage throughout the process than it did. Multiple sources have told KSR that Rice was a detriment in nearly all discussions on the issue. As one person who dealt with Rice told me, "his arrogance made him at times impossible to talk to." Rice was convinced that the Rupp Arena proposal was going to happen and if simply steamrolled anyone who got in the way, all would work itself out. That mindset hurt negotiations along the way but it combusted all possibility of an agreement after his infamous letter to UK and Eli Capilouto that was then leaked publicly. After the Senate denied the funding, Rice wrote a letter in which he publicly blamed Capiluoto and UK for the project's difficulties (ignoring issues 1-4 above) and essentially said, "There will be no new Rupp because of you guys." In doing so, he assumed the public would rally behind the city and force the University's hand. Bad decision...with Calipari and UK more popular than ever, the letter was met with anger in the UK offices and was responded to by President Capilouto in a letter that was a shot heard round the Bluegrass. UK took issue with all of his assertions, torched Rice's arguments one by one and placed the blame at the city's feet. Eli's letter had a tone that made UK fans/alumni proud and with one stroke of the pen, won the PR war, as Rice's plan backfired directly in his face. The ramifications of Rice's letter were so severe, that he had to be moved to the background of future discussions. But the damage was done. As one source told me, "the day Rice sent that letter, for all intents and purposes the project died. Capilouto just kicked the dirt on its grave." Today was thus the announcement of what has been expected for a couple of weeks. The Rupp Arena Renovation project is dead and now the question is what's next. UK's lease with the city goes through 2017-2018 and thus while there is some time remaining, any major change will have to occur soon. UK could just renew with the city under the current structure and continue, but that would lead to a lack of upgrades that I do think will have a negative longterm impact on the program. UK is leaving revenue on the table that other schools are creating and while the problems don't manifest themselves now, they could longterm. While I love Rupp as a building, the only nostalgia to it is because of what happened in it...it's not particularly historic from a building perspective (like Kansas or Duke's arena) and it isn't particularly modern or state of the art. Its a relic of the 70s, a time that nearly every arena built was drab, uniform and boring. We like it because we have won there, but my guess is we will eventually want a nicer place. Some fans suggest building an on-campus arena, but I don't think UK has a desire to put an arena on-campus at this time. The University has its funding priorities in other areas (see Issue Two) and would prefer to have the arena downtown. With a major football renovation taking place, UK Athletic facility money is already being utilized. And time would be wasting, as putting up a new arena would require funding to start within the next six months or so and that seems highly unlikely. For that reason, I think UK's future is in downtown Lexington, although likely as of now, not in a newer facility. It's a shame that a renovated Rupp Arena will not take place. But considering the path of the project, the result now looks in hindsight pre-ordained. What seemed a few months ago like a potential huge coup for the city of Lexington and UK basketball, has now fallen apart with relationships in worse places than they were before the process started. It is an unfortunate story with plenty of blame to go around. But in the end the result will be the same...no new Rupp Arena and a lot pieces that need to be rebuilt going forward.